The fascination with highly visible but largely unknown business models continues. How do infomercials work? What is the value of fashion? How can you make money when no creative idea can be protected? Why is Apple building a sapphire manufacturing facility? It’s all part of a pattern.
Your client deadline is in the morning and you really need some web design resources to finish out the project. A dollar here and a dollar there, often stock items add up quickly.
Just because you’re using stock doesn’t mean you have to jack up your prices. There is a better way to stay competitive.
Lootback, the newest addition to your design toolbelt, pays you to make your purchase from the big stock retailers like Envato, iStock, Shutterstock, DepositPhotos, and ThinkStock.
With Lootback you can search all the marketplaces in one spot. Once you find that perfect item, create an account with Lootback, then head over to the other marketplace and buy it. Lootback will track your purchase and get paid a commission for generating the sale. Then they split that commission with you and credit your account to lower your overall costs.
It’s a pretty unique idea that I’ve never seen before. Lootback will save you time and money, so be sure to give it a try.
The Transportationist, David Levinson @trnsprttnst joins us to discuss the technical, human, environmental and economic factors driving change to the auto-ecosystem.David helps us smartly survey the landscape via:
- Human behavior
- Technology lifecycles
- Urban transportion evolution
- Network capitalization
Photo credit: Wikipedia, CVN-78
I’ve been writing about Apple’s capital intensive operations for some time. The difficulty has always been in explaining the scale involved. I’ve compared the spending to that of Samsung, Microsoft, Google, Intel and Amazon. But these numbers still can’t be easily grasped. You can’t point to any comparable objects when you try to explain the figure. I struggle to create a less abstract notion than that of a “sea of tooling and servers.”
Instead, I’ve used the analogy of US aircraft carriers. Historically, Nimitz class aircraft carriers have cost a less than $5 billion. The USS Ronald Reagan, christened in 2001, cost $4.5 billion. Therefore I was comfortable saying that Apple spends the equivalent of about one Nimitz class aircraft carrier every six months (and that the Navy takes about six years to put it together.)
Unfortunately, costs for aircraft carriers have gone up. The USS Gerald Ford will take about $13 billion to complete. That places Apple and Samsung capital spending in the following context:
Apple has sold 700 million iOS devices. Google claims one billion Android device activations. Microsoft has about 1.5 billion Windows users and Facebook about 1.19 billion. LinkedIn has 259 million users and Twitter has 232 million. Amazon has 215 active account holders and PayPal 137 million.
Markets place a value on these users implicitly when company shares are priced. For example, Twitter whose users are worth about $110 or FaceBook’s $98 and LinkedIn at $93.
This consistency suggests a universally accepted value per social media user but what is the value of an ecosystem user? Apple, Google, Microsoft and even Amazon aspire to enable ecosystems which should be seen are more valuable than mere communities. Ecosystems enable a higher level of economic activity because they are unbounded by the medium itself. Any number of media can be created. Or so the theory goes.
If we could determine a value for an ecosystem user we could test it against the going value of a social media user. Fortunately we have enough data to do so.
The total number of iOS devices sold per quarter allows us to measure the install base of device users. With some assumptions regarding the retirement and attrition rate we can get the following history:
Since the total number of iTunes accounts is updated with some regularity I’ve added it to the graph. I’ve also shown on the same graph the total number of iCloud accounts. For calibration, I included survey data showing the number of iPhone users in two regions (US and EU5).
The closing of one and the onset of another era. In this hundredth episode of The Critical Path we look back to some of the big questions we asked and ask them again with hindsight and foresight. They are:
- What happens to entertainment in the era of pervasive connectivity and computing?
- What happens to privacy when citizenship requires divulging all your secrets to commercial entities?
- What happens to the structure of computing when diffusions of innovations are instantly global?
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The graph below shows the Revenue and Operating Income for a select group of companies. The large numbers represent the share price to earnings (trailing twelve months) ratio (P/E or PE ratio).
Of course the P/E ratio hides a lot of subtlety. It mostly fails to account for the fact that earnings are largely a matter of opinion. A company can defer income (as Apple and Microsoft do), it can invest earnings (as Amazon does) and can otherwise avoid declaring it since it’s taxable.
All theoretical and empirical diffusion studies agree that an innovation diffuses along a S-shaped trajectory. Indeed, the S-shaped pattern of diffusion appears to be a basic anthropologic phenomenon.
This observation dates as far back as 1895 when the French sociologist Gabriel Tarde first described the process of social change by an imitative “group-think” mechanism and a S-shaped pattern. In 1983 Everett Rogers, developed a more complete four stage model of the innovation decision process consisting of: (1) knowledge, (2) persuasion, (3) decision and implementation, and (4) confirmation.
Consequently, Rogers divided the population of potential adopters according to their adoption date and categorized them in terms of their standard deviation from the mean adoption date. He presented extensive empirical evidence to suggest a symmetric bell shaped curve for the distribution of adopters over time. This curve matches in shape the first derivative of the logistic growth and substitution curve as shown below.
In the graph above I applied the Rogers adopter characterization to the data we have on the adoption of smartphones in the US. The latest data covering September is included.Notes:
Microsoft spent $2.6 billion for Advertising in the fiscal year ended June. Apple spent $1.1 billion in its fiscal year ended October.
Other companies will report their full year ad spending later but their previous years’ spending is shown below.
I added a second graph showing the percent of sales that each ad budget represents. Note that Coca Cola retains the crown as the most prolific advertiser when it comes to budgeting.Notes:
- Think of it as 7 percent of every Coke purchase going to pay for the ad that presumably got you to buy it. [↩]